Budget Process

IN DECEMBER OF EACH YEAR, THE VILLAGE BOARD FORMALLY APPROVES BALANCED OPERATING AND CAPITAL BUDGETS FOR THE FOLLOWING YEAR.The village utilizes the target based budget method for operating funds; therefore, the budget process begins with the calculation of available sources. Fixed costs are applied against these available sources and the net amount available is allocated to the Village’s operating departments to fund variable operating costs. Available sources include fund balance remaining after setting aside Board authorized reserve amounts, as well as revenue projected for the new fiscal year. The village’s budget policy is to estimate revenues conservatively and to maintain a spending level less than or equal to current year resources. The issuance of short or long term debt will only occur if needed to fund long-term capital projects and will not be utilized to fund the village’s operating budget. The village continues to maintain reserves in its operating funds that meet or exceed Board approved fund balance and reserve policy levels.

The Board of Trustees has a set policy
of maintaining at least 20 percent
financial reserves (or fund balance
policy) at all times. Keeping healthy
reserves has allowed the village to
consistently earn high bond ratings,
enabling the village to borrow money
at lower interest rates and keep
insurance premiums lower.

The diversified tax base we enjoy
in Orland Park has a mixture of
residential, commercial and light
industrial, along with a significant
retail sales tax source in our stores,
restaurants and other sales oriented
businesses. This has allowed the
Village Board to continuously offer the
same services, year after year, without
depleting its fund balance policy, and
– more importantly – without raising
the tax levy. The tax levy is the amount
of money the village requests Cook
County to collect on our behalf. The
village has not asked the county
to raise its levy for eight years in a row.

As you may have read, retail sales
have been slumping over the past few
years. Known to some as the “Amazon
Effect” – online sales hurting brick and
mortar stores. The overall trend seems
to indicate that we should expect less
revenue from retail sales taxes than we
were once accustomed to receiving.
With the closing of Sears, Carson Pirie
Scott, Toys ‘R Us and Babies ‘R Us,
that decrease is magnified. While
we are very excited about the recent
announcement that Von Maur will be
soon occupying the former Carson’s
spot, it will be some time before we
see that revenue coming in to the
village. Realistically, we have to plan
for the possibility that retail stores may
not provide the same revenue that they
once did.

Just as families create household
budgets based on the income you
expect to make for the year, our Board
of Trustees goes through a similar
process each year, beginning in late
summer or early fall. The Village of
Orland Park Finance Department
projects anticipated revenues for the
following year, and then the board
decides whether to raise any new
revenue (i.e. increasing taxes). Finally,
our village departments are then asked
to bring a budget to the board that
fits within those guidelines.

This year, it was obvious that the village
could not spend the same amount of
money it spent last year without raising
new revenue or depleting its reserves
below the established fund balance
policy. Despite the fact that the village
portion of a resident’s taxes accounts
for less than 7% of the total bill, the
majority of the Village Board was not
comfortable in raising the tax levy.
Therefore, the only way to maintain
the fund balance policy was to cut
spending. We directed the village
manager to bring to the board cuts
that would not impact public safety
or core village services. The current
proposed budget maintains our fund
balance policy, does not raise taxes
and maintains public safety and
core services. Unfortunately, some
programs and services had to be cut.
Other services may take longer to
deliver, but will still be offered.

The Village Board is committed to
providing the best quality of life
possible to residents of Orland Park,
while doing so in an efficient and
economically responsible way. Every
year, we welcome your input during
the entire budget process.